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Management Control System

The document discusses Management Control Systems, emphasizing goal congruence where individual actions align with organizational interests. It identifies informal and formal factors influencing this congruence, including cultural norms and structured rules. Additionally, it outlines the roles of different organizational types and the responsibilities of a controller in managing financial and operational oversight.

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gauransh.gandhi
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2 views13 pages

Management Control System

The document discusses Management Control Systems, emphasizing goal congruence where individual actions align with organizational interests. It identifies informal and formal factors influencing this congruence, including cultural norms and structured rules. Additionally, it outlines the roles of different organizational types and the responsibilities of a controller in managing financial and operational oversight.

Uploaded by

gauransh.gandhi
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Management Control System

Goal Congruence
• In a goal congruent process, the actions people
are led to take in accordance with their
perceived self-interest are also in the best
interest of the organization.
Factors influence Goal
Congruence
Two main factors influencing goal congruence
are:
• Informal Factors
• Formal Factors
Informal Factors

• External Factors
Norms of desirable behavior that exist in the
society of which organization is a part.
Like work ethic, which is manifested in:
➢ employees’ loyalty to the organization
➢ their diligence,
➢ their spirit, and
➢ their pride in doing a good job.
External Factor
• Region Specific - Silicon Valley attracts people with certain
common characteristics like
➢ an entrepreneurial spirit,
➢ a zest for hard work,
➢ high ambition, and
➢ a preference for informal work settings.
• Industry Specific - airline and railways industry.
Internal Factors

• Culture
• Management Style
• Informal Organization
• Perception and Communication:
➢ Formal: Budgets and other official documents
➢ Informal: Conversations.
Formal Control System

• Rules - Shorthand for all types of formal


instructions and controls including job
descriptions, standard operating procedures,
manuals and ethical guidelines.
Formal Control Process

Other
Goals & Strategies Rules information

Reward
(Feedback) Yes

Strategic Responsibility Report Action Was


Budgeting Center Performance
Planning versus Plan
Performance satisfactory?
No
Revise Revise Corrective
Action Measurement
Feedback
Communication
Types of Organizations

• Functional Organizations:
In these, each manager is responsible for a
specific function such as production and
marketing.
• Business Units:
In these, Business Unit managers are responsible
for most of the activities of their particular unit
and business unit functions as a semi-
independent part of the company.
Types of Organizations

• Matrix Organization:
In this, functional manager has dual
responsibility.
Controller
A person responsible for designing and operating
the management control system.
Functions of the Controller

• Preparing financial statements and reports for shareholders and


other external parties.
• Preparing and analyzing performance reports, interpreting these
reports for managers and analyzing program and budget
proposals from various segments of the company and
consolidating them into an overall annual budget.
• Supervising internal audit and accounting control procedures to
ensure the validity of information establishing adequate
safeguards against theft and fraud, and performing operational
audits.
• Developing personnel in the controller organization and
participating in the education of management personnel in
matters relating to the controller function.

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